Looking for Hot Penny Stocks? How to Uncover Hidden Gems and Avoid Trading Traps
Penny stocks, typically defined as stocks trading under $5 per share, offer investors massive upside potential matched with equally sizable downside risks. The low per-share price allows even small absolute moves to translate into massive percentage gains…or losses.
While the lure of 1,000% returns attracts thrill-seeking traders, the majority of penny stocks fizzle out into worthless positions. New investors often struggle to sift through the universe of over 5,000 penny stocks to identify promising opportunities.
With a prudent selection approach, sufficient due diligence, and strategic trade planning, penny stocks can enhance portfolio returns. By developing a defined screening process and research methodology, traders can discover hidden microcap gems while filtering out flawed companies likely to lead to losses.
In this article, we discuss a handful of penny stocks to watch that have turned heads in the stock market today. You will see which catalysts have recently impacted the sentiment, and then you can decide if they’re worth adding to your list of penny stocks. We’ll also include a section all about strategies to find the best penny stocks to buy now. If you wondering how to find cheap stocks to buy, make sure to read the full article.
Penny Stocks To Watch
GlobalStar Inc. (NYSEAMERICAN: GSAT)
Taboola . com (NASDAQ: TBLA)
Grab Holdings (NASDAQ: GRAB)
Blink Charging (NASDAQ: BLNK)
Globalstar Inc. (GSAT)
Shares of Globalstar have maintained their strength over the last few weeks. Prices pulled back in mid-September but seem to have found footing. This move also coincided with news of Dr. Paul Jacobs coming on as CEO. It was also accompanied by details on an agreement to license Jacob’s start-up Xcom Labs to license its tech. Jacobs is also the former CEO of Qualcomm, which brings its own acclaim.
Dr. Jacobs said, “I have devoted my career to advancing and commercializing innovation in wireless technology and am thrilled to continue this journey as CEO of Globalstar. The teams I’ve led have demonstrated the value creation that is possible by applying new technology to enhance capacity of underappreciated spectrum, and that is one of the many opportunities I see at Globalstar.”
As for insiders, Director James Monroe is the latest to purchase shares. He added over 4 million GSAT shares at an average price of roughly $1.13. Details in the purchase notes include the trades representing shares acquired by Thermo XCOM LLC in consideration for its release of debt owed by XCOM Labs, Inc.
They also represent shares purchased from XCOM in a private placement in connection with the Intellectual Property License Agreement and other transactions disclosed in the Form 8-K filed with the Commission on August 31, 2023. Monroe added more to this position in September, picking up another 5 million shares at an average price of $1.52.
Taboola . com (TBLA)
One of the lesser-covered penny stocks in 2023 that has mounted a considerably strong move is Taboola. The native advertising platform company is roughly 80% in the last 5 months-to-date as TBLA stock continues recovering from a sell-off earlier this year.
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If you’re not familiar with Taboola, you’ve likely seen its product used by online platforms like CNBC, BBC, NBC News, Business Insider, Yahoo, and others. It allows for websites to monetize traffic by presenting various ads and offers a unique ad platform for businesses looking to gain exposure. More than 15,000 advertisers use Taboola with a reach of nearly 600 million daily active users.
Late last month, Taboola announced an exclusive multi-year expansion with Advance Local. It is set up to boost engagement and monetize various opportunities. Scott Lawrence, Sr. Director Programmatic Strategy at Advance Local explained, “Taboola has proven to be a great partner over the past eight years, and we appreciate their support in keeping our readers engaged with quality content while working to support local media companies with innovative business solutions. We’re excited about the road ahead, and welcome Taboola’s partnership in our mission to foster quality journalism.”
Against this backdrop, TBLA stock has traded even higher in the stock market this week.
Grab Holdings (GRAB)
Hailed as the everything app, Grab Holdings has weathered an otherwise bearish storm for broader markets in 2023. In fact, GRAB stock is up over 35% since this time last year. Following an earnings beat for its second quarter, momentum has come back into the stock. It has also prompted attention from analysts.
Grab reported an EPS loss per share of $0.03 compared to the larger loss of $0.05 expected. The company also posted $567 million in revenue, which beat estimates of $546.12 million. The company anticipates 2023 revenue to come in between $2.2 billion and $2.3 billion while also raising EBITDA guidance for the year.
“We had a strong set of results for the second quarter. Deliveries GMV grew year-over-year (“YoY”) to hit record-highs, supported by our continued push on key affordability initiatives and an expanding GrabUnlimited subscriber base. More people are using Grab today than ever before, as we achieved our highest Monthly Transacting Users to date,” said Anthony Tan, Group Chief Executive Officer and Co-Founder of Grab. “Looking ahead, we will focus on making our platform more valuable to our driver- and merchant-partners, by providing them with tools and services to become more productive and engaged. Our aim is to continue fostering a flourishing ecosystem that enables them to thrive, while delivering sustainable growth for Grab.”
As for analysts, Citigroup, Benchmark, Barclays, Goldman Sachs, and Evercore ISI raised their GRAB stock forecast price targets. The range is now $4.50-$7 compared to $4-5.20.
Blink Charging (BLNK)
What list of penny stocks would be complete without discussing short-squeeze stocks? Many of the “red hot” growth sectors of the market have been ice cold this year, including EV charging stocks. Blink Charging was once a high-flying name trading above $20 per share.
As of this week, BLNK stock sits just above $3.20. With that selling pressure has also come an increase in short interest. According to data from TD Ameritrade, the BLNK stock short float percentage sits at 32.53%. Meanwhile, data from Fintel has this figure pegged at 30.43%.
Whether or not BLNK stock is a prime short-squeeze candidate is yet to be seen. However, recent developments have put some attention on the beaten-down EV charging stock. Most recently, it was selected by Jon Henry General Store to supply EV charging solutions in New Market, Virginia.
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Blink was also mentioned by UBS in a note for its “potential to achieve breakeven Adjusted EBITDA in 2025,” which tops consensus by a year. UBS also started its coverage on Blink with a Buy rating and $7 target at the end of last month.
With these latest milestones, BLNK stock has gained a bit more attention over the last week.
How To Find Penny Stocks To Buy Now
This introduction will explore practical tips for constructing a penny stock filtering and selection system to maximize profitable trades.
Assess Company Financials and Operations
The first step involves reviewing company financial statements and business fundamentals. Access quarterly and annual reports on penny stock issuer websites, SEDAR, and Canada Stockwatch. Review metrics like revenue growth trends, earnings performance, cash flow generation, debt levels, gross margins, insider ownership, and patent portfolios.
Develop comparison models by analyzing peers of similar size in the same sector. Watch for improving financial trajectories or fundamentals superior to competitors. Be wary of overly promotional language that lacks real substance.
Vet Management and Corporate Governance
An honest, experienced management team with skin in the game increases the odds of a successful penny stock. Review executive bios for education, industry track records, and past exits. Look for meaningful insider ownership through direct share purchases, not just options or bonuses. Board membership and executive churn can signal concerns.Evaluate corporate governance policies and actions for transparency and accountability.
Understand the Products and Market Opportunity
Carefully analyze the company’s products, services, and competitive positioning. Visit product websites and read through marketing materials with an objective eye. Is the value proposition compelling and unique? Who specifically comprises the target customer base?
Realistically assess the addressable market size and opportunity versus the portrayed hype. Benchmark the technology and offerings against alternatives. Subscribe to industry publications covering the space. Join key social media groups to gauge real user experiences.
Penny Stock Technical Chart and Trading Behavior
In addition to fundamentals, utilize technical analysis tools. Review price action, trading volumes, trend strength, support/resistance levels, moving averages, RSI and MACD indicators. Favor penny stocks trending upwards with rising and above-average volumes. Ensure sufficient liquidity for order execution by examining bid/ask spreads and daily traded shares. Monitor message boards and Twitter for trader sentiment. Times of peak positive chatter often precede sell-offs.
Evaluate Public Disclosures and Filings Of Penny Stocks
Carefully read through all penny stock issuers’ regulatory filings, press releases, and disclosures before investing. Scrutinize SEC forms 10-K, 10-Q, 8-K, insider filings, material agreements, property information, legal proceedings, risk factors and MD&A. Watch for red flags like toxic financing terms, defaults, related party deals, litigation, departing auditors or C-Suite members. Verify all company claims through third party sources.
Research Analyst Coverage and Price Targets on Penny Stocks
Seeking out professional analyst coverage provides objective insights into penny stocks. Find analyst ratings, revenue projections, price targets and models to incorporate into investment theses. However, recognize brokerage firm biases if they have provided past financing or make markets in the stock. Independent, unbiased analysts carry greater integrity. Develop an average analyst consensus based on multiple experts.
Penny Stock News Flow and Catalyst Events
Ongoing news developments and upcoming catalyst events move penny stock prices. Follow company press releases, industry announcements, clinical trial updates, product launches, earnings dates, conferences, partnerships and acquisitions. Time entries and exits to benefit from binary events like clinical trial data, FDA approvals, contract awards, exploration drilling and M&A milestones. Schedule a timeline of key events with potential trading impact.
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Fund Ownership and Insider Transactions
Monitor which funds and prominent investors hold meaningful positions in penny stocks. Their buying or selling can telegraph information into future potential. Insider transactions by executives and directors based on company prospects warrant attention. However, distinguish between informative purchases in the open market or routine option executions. Check for illegally coordinated pump and dump schemes.
Penny Stocks & Social Sentiment: Message Board Pulse
While risky to rely upon, active penny stock message boards provide useful sentiment gauges. Measure posting volume surges, investor emotions, and bull/bear debates surrounding companies. Seek factual details behind hype or bashing. Beware paid promotions disguised as organic posts. Use message board activity more for timing versus stock selection.
Whatever you do, conduct sufficient due diligence tailored to the specific company and sector. Construct a rigorous watchlist filtering process based on key metrics and benchmarks. Develop a trading plan mapping out entries, timeframe, price targets, risk controls and exit strategy.
With discipline, penny stocks present asymmetric opportunities for substantial portfolio growth. But rushing in blindly based on a hot tip guarantees failure. Succeeding with penny stocks requires patience, perspective and wisdom.
